Domestic aviation in Australia is about to get more exciting; with Regional Express today announcing plans to operate domestic flights between Sydney, Melbourne and Brisbane, to take on Qantas and Virgin Australia.
By raising a minimum of $30 million through sale-and-lease-back arrangements, equity injection and/or convertible notes, Rex plans on operating their first domestic flights on the 1st of March 2021 using a fleet of five to 10 single-aisle jets.
Rex also notes in their press release that they have received large amounts of interest from external parties, including lessors that are willing to provide the $30 million for 15 unencumbered Saab 340s. Further discussions will continue in the upcoming weeks about the maximum amount that will be raised.
Based in Mascot, New South Wales, Rex operates the worlds largest fleet of Saab 340 turboprops to 60 destinations. Since their formation in 2002, the simple, yet powerful, airline has become crucial to those living in regional cities needing daily or leisurely access to state capitals.
The move to expand into domestic operations comes as Virgin Australia saw its near end as a result of COVID-19 and outstanding financial woes. Although the airline has seen through its administration process with an American investment firm, Bain Capital, the airline faces major changes. As a result of this, Rex has been given an opportunity to pounce on three of the most lucrative domestic routes in Australia.
“…we are the only carrier in Australia that has been able to successfully navigate the turmoil and shocks over the last two decades with uninterrupted operational profits since 2003.”
Rex Deputy Chairman, John Sharp
Detailing their operation, deputy chairman John Sharp mentions that Rex’s cost base for domestic flights is estimated to be at least 35 percent lower than Virgin Australia; with 50 percent lower additional headcount needed proportionately.
Benefiting Rex in this situation is the presence of existing infrastructure at Sydney, Melbourne and Brisbane airports, meaning that the domestic addition is merely seen as an incremental extension by Sharp.
Sharp also adds that the domestic flights would operate under a hybrid model, with affordable fares that include baggage, in-flight meals and pre-assigned seating. For customers looking to pay a subscription, lounge membership will be available.
As part of today’s announcement Rex signed a non-binding memorandum of understanding with ATR, to determine an attractive product out of the ATR42 and ATR72 to replace the ageing Saab 340 fleet.
As for domestic operations, the two likely candidates for Rex are the Airbus A320 and Boeing 737 series; both of which can be acquired easily and for cheap in today’s COVID-stricken aviation environment.
What are your thoughts on this announcement from Rex?
In order for Singapore not to annex Australia, Melbourne, Canberra Sydney Newcastle needs to be a denser conurbation. The population is too spread out, and in a extreme situation we see end up Perth and Brisbane receive international flights.
Australians are suppose to travel around and see the signs. They need to huddle together in the Melcansydbane megaoolitan and then invite people who know how to live in the harsher conditions, for eg Australia should promote migration of Chinese to Australia, limiting then by state and dialect. you’ll want people from eastern China like Zhejiang, Shanghai where these people are already first world, not accept every Tom, Dick n Harry. If anything Singaporeans should be welcomed. Taiwanese descent should also be invited Taipei will become New Taiwan, China’s bigger better version of Hong Kong. Inevitably some will want to leave. Northeast China too, because we can’t be too sure Korea will be confident enough to walk it alone I have a feeling they will agree to bring part of China via a North Asia Union arrangement.
I think Qantas is on very shaky ground and is likely about to collapse. They’ve kept A380 alongside 744 alongside A330 operating alongside 787. That’s horrible. You’re just wasting money. Emirates might have seen the writing on the wall and told them to fuck off because they went straight back to the ex aka Singapore.
That’s probably the reason why SkyTeam hasn’t switched to VA, aka SQ, because typically Australia is served by SQs best and brightest and interlining onto SQ instead of QF where the experience of flying SQ trumps mileage accrual, as explained by CZ boss last year.
Anyway coming down to ground level, just like SiN KUL u cannot use widebody or narrowbody, u need to go smaller. Spacejet proposed M100 or M70 will be good applications of this. I do think Kingsford Smith, Bankstown, Newcastle and Wollongong will all be promoted as Sydney airports because if Brisbane West is just cargo then surely Sydney West too will be cargo. Sydney all airports connecting with Essendon, Tullamarine, Avalon, and then Sheparton, Wagga Wagga. This will be safer, cheaper and the soon to be launched Embraer E3, MA700x are all electric planes.
Rex is very smart this is the right time to expand and grab the best deals at discounted prices, they have to keep the same business model operating regionally with Turboprop and not upgrading to jet engines, Turboprops consumes less fuel and ATR got a very nice planes can beat 320s and 737.
Congrats REX I wish them the best.
Is this really a good time for a third airline to enter the Australian market?
Remember Impulse who were later just absorbed into Qantas?
Surely Rex would be better off focussing on its niche market rather than following other airlines before it.